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Holiday spending likely to rise, but consumers worry

WASHINGTON (11/22/06)--Consumers are slightly more inclined to reduce their holiday spending this season than in recent years, suggesting that this year's increase in holiday spending will be weaker than in the past few years, according to the results of the seventh annual survey commissioned by the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA).

CUNA Chief Economist Bill Hampel (left) and Steve Brobeck, executive director of the Consumer Federation of America (CFA) during the seventh annual press conference on consumer holiday spending. Click on the audio control panel to hear Hampel's comment. (Photo provided by CUNA)

Energy costs, though declining, remain a factor, and consumers are also expressing greater concern about paying off credit cards and other debt, said the report. More than twice as many consumers say they will spend less (32%) than more (15%) this holiday season, with about half (52%) saying they will spend about the same, the survey found. Compared to last year's survey results, the percentage saying they would spend less edged up from 30% to 32%.

However, the percentage saying they would spend much less than last year jumped from 13% to 18%.

"Our experience with this survey is consumers tend to say they will spend less than they actually do, and our overall survey findings are slightly weaker than last year. This suggests many households will feel financially 'hung over' in a couple of months unless they do something about it now," said CUNA Chief Economist Bill Hampel.

This year's CUNA/CFA survey asked respondents about the influence of six factors on intended holiday spending.

Energy costs remain the most important factor that consumers say is influencing their holiday spending, cited by 32% as reason they would spend less. Other factors consumers said would influence them to spend less included general household expenses (28%), their family finances (27%) and the price of gifts (26%).

While 32% of consumers said "the cost of gasoline and home heating" would cause them to spend less this holiday season, this figure is down from 41% last year. And in this year's survey one in four consumers (26%) said energy costs would be a factor that would cause them to increase their spending.

The CFA/CUNA survey was conducted Nov. 9-12 among more than 1,000 representative adult Americans by Opinion Research International. The survey's margin of error is plus or minus 3 percentage points.